Correlation Between Digital Realty and American Tower
Can any of the company-specific risk be diversified away by investing in both Digital Realty and American Tower at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Digital Realty and American Tower into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digital Realty Trust and American Tower Corp, you can compare the effects of market volatilities on Digital Realty and American Tower and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Digital Realty with a short position of American Tower. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Realty and American Tower.
Diversification Opportunities for Digital Realty and American Tower
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Digital and American is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Digital Realty Trust and American Tower Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Tower Corp and Digital Realty is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Digital Realty Trust are associated (or correlated) with American Tower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Tower Corp has no effect on the direction of Digital Realty i.e., Digital Realty and American Tower go up and down completely randomly.
Pair Corralation between Digital Realty and American Tower
Considering the 90-day investment horizon Digital Realty Trust is expected to generate 0.77 times more return on investment than American Tower. However, Digital Realty Trust is 1.3 times less risky than American Tower. It trades about 0.14 of its potential returns per unit of risk. American Tower Corp is currently generating about -0.17 per unit of risk. If you would invest 18,101 in Digital Realty Trust on August 26, 2024 and sell it today you would earn a total of 883.00 from holding Digital Realty Trust or generate 4.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digital Realty Trust vs. American Tower Corp
Performance |
| Timeline |
| Digital Realty Trust |
| American Tower Corp |
Digital Realty and American Tower Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital Realty and American Tower
The main advantage of trading using opposite Digital Realty and American Tower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Realty position performs unexpectedly, American Tower can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in American Tower will offset losses from the drop in American Tower's long position.| Digital Realty vs. Crown Castle | Digital Realty vs. American Tower Corp | Digital Realty vs. Iron Mountain Incorporated | Digital Realty vs. Hannon Armstrong Sustainable |
| American Tower vs. Digital Realty Trust | American Tower vs. Equinix | American Tower vs. SBA Communications Corp | American Tower vs. Iron Mountain Incorporated |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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